Notice of 2002 Annual Meeting of ShareholdersMorgan Stanley Dean Witter & Co.25 Cabot Square, Canary Wharf

London, EnglandMarch 19, 2002, 11:30 a.m., local time

February 15, 2002

Fellow shareholder:

We cordially invite you to attend Morgan Stanley Dean Witter & Co.’s 2002 annual meeting of shareholders to:

• elect four directors to the Board of Directors for a three-year term;

• approve an amendment to the Company’s Directors’ Equity Capital Accumulation Plan increasingthe number of shares of the Company’s common stock reserved for issuance under the Plan by1,000,000 shares;

• ratify the appointment of Deloitte & Touche LLP as independent auditors;

• consider a shareholder proposal; and

• transact such other business as may properly come before the meeting.

Enclosed are our proxy statement, a proxy, our Summary Annual Report and our 10-K. Our proxy statementdiscusses on page 20 a management recommendation regarding a director evaluation of our Shareholder RightsPlan (pill) that our directors will consider at their March 18, 2002 board meeting.

We are pleased to offer you an opportunity to receive future versions of these documents electronically over theinternet. By following the instructions on page 22, you will receive electronic access to these documents and willhelp us reduce future printing and postage costs.

We hope you will read the proxy statement and submit your proxy. We appreciate your cooperation.

Very truly yours,

Philip J. Purcell Robert G. ScottChairman and Chief Executive Officer President and Chief Operating Officer

Table of Contents

Voting information .............................................................................................................................................. 1

Item 1—Election of directors ...................................................................................................................... 2

Board meetings and committees .................................................................................................................. 6

Director compensation ................................................................................................................................ 6

Item 2—Amendment to the Directors’ Equity Capital Accumulation Plan .......................................... 7

Beneficial ownership of Company common stock .............................................................................................. 9

Stock ownership of directors and executive officers .................................................................................. 9

Principal shareholders .................................................................................................................................. 10

Executive compensation ...................................................................................................................................... 10

Compensation Committee report on executive compensation .................................................................... 10

Summary compensation table ...................................................................................................................... 13

Option grants in last fiscal year.................................................................................................................... 14

Aggregated option exercises in last fiscal year and fiscal year-end option values ...................................... 15

Pension plans................................................................................................................................................ 16

Stock performance graph ............................................................................................................................ 17

Item 3—Ratification of appointment of the Company’s independent auditors .................................... 17

Audit Committee report .............................................................................................................................. 18

Item 4—Shareholder proposal regarding staggered boards .................................................................... 19

Other matters ........................................................................................................................................................ 20

Shareholder Rights Plan (pill): Director Evaluation .................................................................................... 20

Certain transactions ...................................................................................................................................... 20

Other business .............................................................................................................................................. 21

Shareholder proposals for the 2003 annual meeting .................................................................................... 21

Cost of soliciting your proxy........................................................................................................................ 21

Shareholders sharing an address .................................................................................................................. 22

Electronic access to annual meeting materials ............................................................................................ 22

Morgan Stanley Dean Witter & Co.1585 Broadway

New York, New York 10036

Proxy Statement

We are sending you this proxy statement in connection with the solicitation of proxies by our Board of Directorsfor the 2002 annual meeting of shareholders to be held in the Shakespeare Room on the 12th floor of our officesat 25 Cabot Square, Canary Wharf, London, England on Tuesday, March 19, 2002, at 11:30 a.m., local time. Weare mailing this proxy statement and the accompanying form of proxy to shareholders on or about February 15,2002. In this proxy statement, we refer to Morgan Stanley Dean Witter & Co. as the “Company,” “we” or “us.”When we refer to the Company’s fiscal year, as in “fiscal 2001,” we mean the twelve-month period fromDecember 1 through November 30.

Voting informationRecord date. The record date for the annual meeting is January 28, 2002. You may vote all shares of theCompany’s common stock that you owned as of the close of business on that date. Each share of common stockentitles you to one vote on each matter to be voted on at the annual meeting. On the record date, 1,101,617,649shares of common stock were outstanding. We need a majority of the shares of common stock outstanding on therecord date present, in person or by proxy, to hold the annual meeting.

Submitting voting instructions for shares held in your name. If you hold shares in your name as a holder ofrecord, you may vote your shares by proxy through the mail, telephone or internet as described on the proxy card.If you submit your proxy via the internet, you may incur costs such as telephone and internet access charges.Submitting your proxy now will not limit your right to vote in person at the annual meeting. A properlycompleted and submitted proxy will be voted in accordance with your instructions, unless you subsequentlyrevoke your instructions. If you submit a signed proxy card without indicating your vote, the person voting theproxy will vote your shares according to the Board’s recommendations.

Submitting voting instructions for shares held in employee plans. If you hold shares in, or have beenawarded stock units under, certain employee plans, you will receive a voting instruction card for those shares. Asdescribed on the card, you may submit your voting instructions by mail, telephone or internet. Shares held in thefollowing employee plans are subject to the instructions described below.

• START Plan, Deferred Profit Sharing Plan (DPSP) and Employee Stock Ownership Plan (ESOP). TheSTART, DPSP and ESOP trustee, as applicable, must receive your voting instructions for the common stockheld on your behalf in these plans on or before March 17, 2002. If the trustee does not receive your votinginstructions by that date, it will vote your START, DPSP and ESOP shares, as applicable, in the sameproportion as the voting instructions that it receives from other plan participants in the applicable plan. ESOPshares that are unallocated to participants will be voted in the same manner. On January 28, 2002, there were44,033,480 and 520,027 shares in START and DPSP accounts, respectively, and 22,136,401 shares in theESOP.

• Other equity-based plans. State Street Bank and Trust Company acts as trustee for a trust (Trust) that holdsshares of common stock underlying stock unit awards made to employees under several of the Company’sequity-based plans. Employees allocated shares held in the Trust must submit their voting instructions forreceipt by the trustee on or before March 17, 2002. If the trustee does not receive your instructions by thatdate, it will vote your shares, together with unallocated shares held in the Trust, in the same proportion as thevoting instructions that it receives for shares held in the Trust in connection with such plans. The trustee willvote shares held in the Trust on behalf of former Company employees in the same proportion as the votinginstructions that it receives for shares held in the Trust in connection with such plans. On January 28, 2002,there were 83,272,554 shares in the Trust.

1

Submitting voting instructions for shares held in street name. If you hold shares through a broker, followthe voting instructions you receive from your broker. If you would like to vote in person at the meeting, you mustobtain a proxy from your broker and bring it to the meeting. Even if you do not submit voting instructions to yourbroker, your broker may still be permitted to vote your shares. New York Stock Exchange (NYSE) memberbrokers may vote your shares under the following circumstances.

• Discretionary items. All proposals presented in this proxy statement, other than the shareholder proposal, are“discretionary” items. Member brokers that do not receive instructions from beneficial owners may vote on thediscretionary proposals presented in this proxy statement in the following manner: (1) the Company’s whollyowned subsidiaries, Morgan Stanley & Co. Incorporated (MS&Co.) and Morgan Stanley DW Inc. (MSDWI),are each entitled to vote your shares only in the same proportion as the votes cast by all record holders on theproposal, and (2) all other NYSE member brokers may vote your shares in their discretion.

• Non-discretionary items. The shareholder proposal is a “non-discretionary” item and may not be voted on byNYSE member brokers, including MS&Co. and MSDWI, absent specific voting instructions from beneficialowners.

If you do not submit voting instructions with respect to a matter and your broker does not have discretion to voteyour shares on such matter, your shares will not be counted in determining the outcome of the vote on suchmatter at the annual meeting.

Revoking your proxy. You can revoke your proxy at any time before your shares are voted by (1) delivering awritten notice of revocation prior to the annual meeting to Donald G. Kempf, Jr., Executive Vice President, ChiefLegal Officer and Secretary, Morgan Stanley Dean Witter & Co., 1585 Broadway, New York, New York 10036;(2) submitting a later proxy; or (3) voting in person at the annual meeting. Merely attending the annual meetingwill not revoke your proxy.

Votes required to elect directors and to adopt other proposals. Directors are elected by a plurality of thevotes cast. The ratification of Deloitte & Touche’s appointment, the amendment to the Directors’ Equity CapitalAccumulation Plan, and the shareholder proposal each require the affirmative vote of a majority of the shares ofcommon stock represented at the annual meeting and entitled to vote thereon in order to be approved.

Withholding your vote or voting to “abstain.” In the election of directors, you can withhold your vote forany nominee. Withheld votes will be excluded entirely from the vote and will have no effect on the outcome. Onthe other proposals, you can vote to “abstain.” If you vote to “abstain,” your shares will be counted as present atthe annual meeting for purposes of that proposal and your vote will have the effect of a vote against the proposal.

Item 1—Election of Directors

Our Board currently has eleven directors, divided into three classes. Members of each class serve for a three-yearterm. Shareholders elect one class of directors at each annual meeting. At this annual meeting, shareholders willvote on the election of the four nominees described below.

The Board proposes, based on the recommendation of its Nominating and Directors Committee, the election ofJohn E. Jacob, Charles F. Knight, Miles L. Marsh and Laura D’Andrea Tyson as directors for a term ending atthe 2005 annual meeting. The nominees are all current directors of the Company, and each nominee has indicatedto the Company that he or she will serve if elected. We do not anticipate that any nominee will be unable orunwilling to stand for election, but if that happens, your proxy will be voted for another person nominated by theBoard.

2

Nominees for election to the Board of Directors for a three-year term ending in 2005

John E. Jacob (67). Executive Vice President and Chief CommunicationsOfficer of Anheuser-Busch Companies, Inc., a global corporation that includes abrewing organization, a manufacturer of aluminum beverage containers and parkoperations (since 1994). President and Chief Executive Officer of National UrbanLeague, Inc. (1982 to 1994).

Director since: September 2001

Other directorships: Anheuser-Busch Companies, Inc. and Coca-ColaEnterprises Inc.

Charles F. Knight (66). Chairman (since 1974), Chief Executive Officer(1973 to October 2000) of Emerson Electric Co., a manufacturer of electronic andelectrical products.

Director since: January 1999

Other directorships: Anheuser-Busch Companies, Inc., Emerson Electric Co.,International Business Machines Corporation, SBC Communications Inc. andBP p.l.c.

Miles L. Marsh (54). Chairman and Chief Executive Officer of Fort JamesCorporation, a manufacturer and marketer of consumer paper products (August 1997to November 2000). Chairman (January 1996 to August 1997) and President andChief Executive Officer (October 1995 to August 1997) of James River Corporationof Virginia.

Director since: May 1997; Director of Dean Witter, Discover & Co. (December1996 to May 1997)

Other directorships: GATX Corporation and Whirlpool Corporation

Laura D’Andrea Tyson (54). Dean of the London Business School (sinceJanuary 2002). Dean (July 1998 to December 2001) and Class of 1939 Chair inEconomics and Business Administration (January 1997 to July 1998) at the WalterA. Haas School of Business at the University of California, Berkeley. Chair of thePresident’s National Economic Council (February 1995 to December 1996).

Director since: May 1997; Director of Morgan Stanley Group Inc. (April 1997 toMay 1997)

Other directorships: Eastman Kodak Company, Fox Entertainment Group, Inc.,SBC Communications Inc. and Human Genome Sciences, Inc.

The Board of Directors recommends a vote FOR the election of all four nominees.

3

Directors continuing in office—term expiring in 2003

Philip J. Purcell (58). Chairman of the Board and Chief Executive Officer(since May 1997). Chairman of the Board and Chief Executive Officer of DeanWitter, Discover & Co. (1986 to May 1997). Director or trustee of approximately 100registered investment companies for which Morgan Stanley Investment Advisors Inc.,a wholly owned subsidiary of the Company, serves as investment manager orinvestment adviser.

Director since: May 1997; Chairman of the Board of Dean Witter, Discover & Co.(1986 to May 1997)

Other directorships: AMR Corporation

Robert G. Scott (56). President and Chief Operating Officer (since March2001). Executive Vice President and Chief Financial Officer (May 1997 to March2001). Head of Morgan Stanley Group Inc.’s Investment Banking Division (1994 to1996). Managing Director of MS&Co. (since 1979).

Director since: March 2001

C. Robert Kidder (57). Chairman of the Board and Chief Executive Officer(since January 1995) of Borden, Inc., a consumer and specialty products company.

Director since: May 1997; Director of Dean Witter, Discover & Co. (July 1993 toMay 1997)

Other directorships: Borden, Inc. and Electronic Data Systems Corporation

Michael A. Miles (62). Special limited partner (since January 1995) inForstmann Little & Co., a private investment firm with interests in electronics,aerospace, publishing and other industries.

Director since: May 1997; Director of Dean Witter, Discover & Co. (February1993 to May 1994; January 1995 to May 1997)

Other directorships: Sears, Roebuck and Co., The Allstate Corporation, AOLTime Warner Inc., Dell Computer Corporation, AMR Corporation, Exult, Inc. andCommunity Health Systems, Inc.

4

Directors continuing in office—term expiring in 2004

Robert P. Bauman (70). Chief Executive Officer of SmithKline Beecham plc(until retirement in 1994). Non-executive Chairman (May 1998 to February 1999)and Deputy Chairman and non-executive director (October 1997 to May 1998) ofBTR plc, a manufacturing and engineering business with global operations. Non-executive Chairman of British Aerospace plc (May 1994 to May 1998).

Director since: May 1997; Director of Morgan Stanley Group Inc. (April 1996 toMay 1997)

Other directorships: Non-executive director of Invensys plc.

Edward A. Brennan (68). Chairman, President and Chief Executive Officerof Sears, Roebuck and Co. (until retirement in 1995).

Director since: May 1997; Director of Dean Witter, Discover & Co. (February1993 to May 1997)

Other directorships: AMR Corporation, Minnesota Mining and ManufacturingCompany, The Allstate Corporation and Exelon Corporation

John W. Madigan (64). Chairman (since January 1996), Chief ExecutiveOfficer (since May 1995) and President (1994 to July 2001) of Tribune Company, amedia company.

Director since: July 2000

Other directorships: AT&T Wireless Services, Inc. and Tribune Company

5

Board meetings and committees. During fiscal 2001, the Board met eight times. Each director attended atleast 75% of the total number of meetings of the Board and committees on which the director served that wereheld while he or she was a member. The Board’s standing committees include the following.

Committee Members Primary Responsibilities # of Meetings

Audit Edward A. Brennan (Chair)John E. JacobC. Robert KidderJohn W. MadiganMiles L. MarshDr. Laura D’Andrea Tyson

• Monitors the integrity of the Company’sconsolidated financial statements and itssystem of internal controls.

• Monitors the independence and performanceof the Company’s internal and independentauditors.

4

Compensation Charles F. Knight (Chair)Robert P. BaumanEdward A. BrennanC. Robert Kidder

• Determines the compensation policies applicableto our senior officers and establishes theircompensation in light of these policies.

• Administers our employee compensation plans.

6

Nominating andDirectors

Michael A. Miles (Chair)Robert P. BaumanJohn W. MadiganMiles L. MarshDr. Laura D’Andrea Tyson

• Evaluates and recommends candidates forelection to the Company’s Board of Directors.

• Assesses the Board’s performance at leastonce every three years.

• Recommends director compensation andbenefits philosophy.

• Periodically reviews the Company’s corporategovernance profile.

3

The Nominating and Directors Committee will consider director candidates recommended by shareholders.Recommendations may be sent to Donald G. Kempf, Jr., Secretary, 1585 Broadway, New York, New York10036.

Director compensation. Employee directors receive no compensation for Board service.

• Fees. Non-employee directors receive the following fees for their Board service:

Board Member .......................................................................... $35,000 annuallyCommittee Chair ...................................................................... $ 7,500 annuallyCommittee Member .................................................................. $ 5,000 annuallyAttendance at Board or Committee Meeting ............................ $ 1,000 per meeting

• Directors’ Equity Capital Accumulation Plan (DECAP). Under the DECAP, non-employee directorsreceive a grant of 8,000 stock options and 1,200 shares of common stock upon becoming a director andannually thereafter while a director. Stock options have an exercise price equal to the fair market value of ashare of common stock on the award date. The DECAP also provides that each non-employee director mayelect to defer receipt of common stock grants and receive his or her retainers and fees, on a current or deferredbasis, in certain forms as set forth in the description of the DECAP under Item 2. Directors receive dividendson any deferred stock units in the form of additional stock units.

• Other benefits. The Company matches certain charitable gifts by non-employee directors up to $2,000 peryear. During fiscal 2001, we matched $2,000 in charitable gifts on behalf of each of Charles F. Knight andC. Robert Kidder. Non-employee directors do not receive Company retirement benefits.

6

Item 2—Amendment to the Directors’ Equity Capital Accumulation Plan (DECAP)General. Shareholders are asked to approve an amendment to the Company’s DECAP increasing the numberof shares of common stock authorized for issuance thereunder by a total of 1,000,000 shares. The DECAP isintegral to the Company’s ability to attract and retain non-employee directors and to more closely align theirinterests with those of our shareholders. The following summary of the principal provisions of the DECAP is nota complete description of all of its terms and provisions. The Company will furnish a copy of the DECAP to anyshareholder upon request to: Executive Compensation, Morgan Stanley Dean Witter & Co., 1221 Avenue of theAmericas, New York, New York 10020 (Telephone No. (212) 762-8431).

Summary of the DECAP. The following summarizes the DECAP, which is administered by the Board. Thecapitalized terms not otherwise defined in this summary shall have the meaning assigned to them in the DECAP.

Eligibility. Only non-employee directors may participate in the DECAP. There are currently nine eligibledirectors.

Shares subject to the DECAP. As of November 30, 2001, and without taking into account the proposedamendment to the plan, approximately 83,734 shares remained available for issuance under the DECAP (subjectto adjustment in accordance with the DECAP). As of February 1, 2002, the closing price of our common stock asreported on the New York Stock Exchange Composite Transaction Tape (NYSE Composite Tape) was $53.41per share.

Option grants. Each director receives a nonqualified option (Option) to purchase 8,000 shares of commonstock upon initially joining the Board (unless the director joins during the 60 days before the Company’s annualmeeting of shareholders in any year) and annually thereafter. Each Option has an exercise price equal to thecommon stock’s fair market value on the grant date. Options are vested upon grant, are not transferable, may notbe exercised for six months after the grant date and expire 10 years after the grant date.

If a director’s service terminates by reason of Disability, Normal Retirement or death, each Option held bysuch director remains exercisable until the original expiration date. If a director’s service terminates for any otherreason (except for Cause), each Option held by such director remains exercisable until the earlier of 90 days afterthe termination date and the expiration date. If a director is terminated for Cause, all Options will be forfeited andwill no longer be exercisable.

Stock awards. Each director receives 1,200 shares of common stock (Director Stock) upon initially joiningthe Board (unless the director joins during the 60 days before the Company’s annual meeting of shareholders inany year) and annually thereafter. Director Stock may not be transferred or sold by a director for six months afterit is awarded.

Elective deferrals. Each director may elect to defer 1) all or part of the annual cash retainer(s) or meetingfees for the Board or any committee thereof, or 2) shares of Director Stock (together, Deferred Amounts).

• Stock unit deferral. A director may elect to have all or part of the Deferred Amounts credited to a stockunit account in units equivalent in value to shares of common stock (Stock Units). A director who defersDirector Stock will be credited with a number of Stock Units equal to the number of shares of DirectorStock deferred. The number of Stock Units credited on account of deferred retainer(s) and meeting feeswill be based on the common stock’s fair market value on the deferral date. Stock Unit accounts arecredited on dividend payment dates with additional Stock Units based on the cash dividend and thecommon stock’s fair market value.

• Cash deferral. A director may elect to have all or part of the Deferred Amounts derived from theretainer(s) or meeting fees credited to a cash account. The cash account will earn interest at a rate basedon the time weighted average interest rate paid by the Company to institutions from which it borrowsfunds.

7

• Distributions. Distributions of Deferred Amounts are made in a lump sum, in various installments or acombination thereof. Distributions from the cash account are made in cash. Distributions from the StockUnit account are made in whole shares of common stock equal to the number of whole Stock Units to bedistributed (and cash in lieu of fractional shares).

Election to receive stock. A director may elect to receive all or a portion of the retainer(s) and meetingfees in shares of common stock. The number of shares received is based on the common stock’s fair marketvalue. Directors receive cash in lieu of fractional shares.

Election to receive options. A director may elect to receive the annual Board retainer fee in Options. Thenumber of Options is obtained by dividing $35,000 by the fair market value of a share of common stock on theaward date and multiplying the result by three. Each Option has an exercise price equal to the common stock’sfair market value on the award date and otherwise has the terms of the Options described above.

Adjustments. If there is any change in the Company’s corporate structure affecting the common stock(e.g., merger, reorganization, recapitalization or stock split), the number of shares authorized for issuance underthe DECAP, the number of shares to be awarded as annual Director Stock and annual Options and the director’sequity participation in the DECAP will be equitably adjusted.

Amendments and termination. The Board may suspend, terminate or amend the DECAP at any time, inwhole or in part.

New plan benefits. The following table sets forth the Options and Director Stock that will be awarded to thecurrent non-employee directors under the DECAP in fiscal 2002, if shareholders approve the amendment to theDECAP.

Directors’ Equity Capital Accumulation Plan

Non-Employee Director Group Number of Units Dollar Value ($)

OptionsDirector Stock

72,00010,800

1,281,840(1)

576,828(2)

(1) The dollar value of the Options is calculated by assuming a value equal to one-third of the common stock’smarket price per share of $53.41, the closing price of a share of common stock as reported on the NYSEComposite Tape on February 1, 2002. If an Option were valued using an option pricing model such as Black-Scholes, the Option’s value would depend upon the assumptions used. For example, employing a modifiedBlack-Scholes model, the values could range from $16.05 per Option (assuming the Option was exercised at theend of three years) to $26.88 per Option (assuming the Option was exercised at the end of its 10-year term). Eachof the foregoing values assumes: (i) a stock price volatility of 43.64%; (ii) a risk-free rate of return that was theimplied rate on the grant date of a zero coupon U.S. Treasury STRIPS having a remaining term approximatelyequal to the assumed term of the subject Option; and (iii) the Company’s estimated annualized dividend yield onthe grant date was constant over the life of the Option. The actual value, if any, realized will depend on theexcess of the common stock’s market price on the Option exercise date over the Option’s exercise price. Thevalues are hypothetical and there is no assurance that such values will be realized.(2) The dollar value of the shares of common stock is based on a price of $53.41 per share, the closing price of ashare of common stock as reported on the NYSE Composite Tape on February 1, 2002. The actual value adirector realizes will depend upon the fair market value of common stock on the grant date.

8

Certain federal income tax consequences. The following is a brief summary of certain of the federal incometax consequences to the Company and the directors of the grant and exercise of Options. The tax rules maychange at any time.

Generally, a director does not recognize taxable income, and the Company is not entitled to a deduction, upon thegrant of an Option. Upon the exercise of an Option, the director recognizes ordinary income equal to the excessof the fair market value of the shares of common stock acquired over the Option exercise price. The amount ofsuch excess is generally determined by reference to the fair market value of our common stock on the date ofexercise. The Company is generally entitled to a deduction equal to the compensation taxable to the director asordinary income. Although compensation income is normally subject to federal income, Social Security andemployment tax withholding, such withholding is generally not required for directors participating in the DECAPsince they are not employees of the Company or an affiliate.

The Board of Directors recommends a vote FOR approval of the amendment to the DECAP.

Beneficial ownership of Company common stock

Stock ownership of directors and executive officers. We encourage stock ownership by our directors,officers and employees to align their interests with your interests as shareholders. The following table sets forththe beneficial ownership of common stock, as of January 4, 2002, by each of our directors, director nominees andexecutive officers named in the summary compensation table (Named Executive Officers), as well as by all ourcurrent directors and executive officers as a group.

Common Stock Beneficially Owned as of January 4, 2002

Name Shares(1)UnderlyingStock Units(2)

Subject toStock Options

Exercisable within 60days of 1/4/02(3) Total(4)

NAMED EXECUTIVE OFFICERS

Philip J. Purcell 2,442,416 564,107 3,151,214 6,157,737Robert G. Scott 1,951,521 1,031,131 1,511,107 4,493,759Vikram S. Pandit 97,349 1,239,048 1,578,683 2,915,080Stephan F. Newhouse 334,991 617,218 597,582 1,549,791John P. Havens 15,731 868,621 1,039,195 1,923,547

DIRECTORS AND DIRECTOR NOMINEES

Robert P. Bauman 6,099 7,868 47,767 61,734Edward A. Brennan 188,044 6,208 79,767 274,019John E. Jacob 1,000 1,761 — 2,761C. Robert Kidder 5,200 12,116 79,767 97,083Charles F. Knight 2,012 7,790 32,000 41,802John W. Madigan — 3,052 18,836 21,888Miles L. Marsh 10,800 5,419 48,000 64,219Michael A. Miles 18,788 11,996 79,767 110,551Laura D’Andrea Tyson 6,298 — 37,796 44,094All current directors and executive officers asa group (23 persons) 5,594,370 7,180,647 13,069,533 25,844,550

(1) Includes 45,362 shares of common stock owned by Mr. Purcell’s spouse and 5,244 shares held in a custodialaccount on behalf of Mr. Purcell’s child for which he is custodian, as to which Mr. Purcell disclaims beneficialownership. Includes 31,068 shares owned by Mr. Brennan’s spouse, over which he has indirect investment andvoting power. Includes 5,200 shares owned jointly with Mr. Kidder’s spouse, over which he has sharedinvestment and voting power. Includes 214,960 shares (20,000 as to which beneficial ownership has beendisclaimed), over which certain of the directors and executive officers as a group have shared investment andvoting power with family members.

9

(2) Shares of common stock held in the Trust corresponding to stock units. Directors and executive officers maydirect the voting of the shares corresponding to their stock units, but voting by executive officers is subject to thevoting provisions of the Trust described on page 1.(3) Includes options granted on December 6, 2001 and December 5, 2000 in respect of fiscal 2001 and 2000,respectively.(4) Each executive officer and director beneficially owned less than 1% of the shares of common stockoutstanding. The group consisting of all directors and executive officers beneficially owned approximately2.35% of the common stock outstanding.

Principal shareholders. The following table contains information regarding the only person we know of thatbeneficially owns more than 5% of our common stock.

Shares of Common StockBeneficially Owned

Name and Address Number Percent

State Street Bank and Trust Company(1) 101,752,711 9.3%225 Franklin StreetBoston, MA 02110

(1) Based on a Schedule 13G Information Statement filed February 7, 2002 by State Street, acting in variousfiduciary capacities. The Schedule 13G discloses that State Street had sole voting power as to 22,254,716 shares,shared voting power as to 76,814,333 shares, sole dispositive power as to 23,444,065 shares and shareddispositive power as to 78,308,646 shares of common stock; that shares of common stock held by State Street onbehalf of the Trust and a Company-sponsored equity-based compensation program amount to 7.1% of thecommon stock; and that State Street disclaims beneficial ownership of all shares reported therein.

Executive compensation

Compensation Committee report on executive compensation.

Compensation governance. The Compensation Committee establishes and administers compensationprograms and approves compensation paid to the Company’s Management Committee, including the NamedExecutive Officers.

Compensation policies. Our fundamental policy is to closely link our Management Committee’s compensationwith the achievement of annual and long-term performance goals. Our policies are designed to awardcompensation based upon Company, business unit and individual performance and to motivate our ManagementCommittee members to achieve strategic business objectives. We provide total compensation competitive withthat provided by our peer group of financial institutions, fostering the Company’s ability to attract, retain andmotivate employees critical to its long-term success and the creation of shareholder value. We include asignificant equity component in total compensation because we believe that equity-based compensation moreclosely aligns the long-term interests of employees with those of shareholders.

We consider many factors in awarding compensation. We assess the Company’s results, compare them toestimates of competitors’ results and receive input and estimates from external sources regarding the market forthe talents and skills of the Company’s employees. We utilize both quantitative and qualitative factors whendetermining total compensation for Management Committee members and when awarding equity-basedcompensation to employees. Quantitative factors include, among others, absolute levels of, and year-to-yearchanges in, return on equity (ROE), net revenues, net income, profit before taxes, earnings per share, book valueper share, market share and several key business drivers. We utilize ROE as a key measure of corporateperformance, both on an absolute basis and compared to estimates of our competitors’ performance. We review

10

survey data on peer companies for purposes of monitoring Management Committee compensation levels inrelation to performance. We also review the Company’s ratios of compensation to net revenues andcompensation to pre-compensation profit before taxes. Qualitative factors we consider include achievement ofpre-established performance goals and subjective assessments of individual performance. Though we consider allof these factors, we determine total compensation based largely upon a subjective process, focusing primarily onCompany and business unit financial performance, on an absolute and comparative basis, assessments ofindividual performance and expected market compensation.

Our policy is to maximize the tax deductibility of compensation payments to Management Committee membersunder Section 162(m) of the Internal Revenue Code and the regulations thereunder (Section 162(m)). Ourstockholders have approved our incentive plans that are designed and administered to qualify compensationawarded thereunder as “performance-based.” We may, however, authorize payments to Management Committeemembers that may not be fully deductible if we believe such payments are in our shareholders’ interests.

Compensation program. Our Management Committee members receive total compensation, excludingemployee benefits, composed of base salary and incentive compensation consisting of cash and equity-basedcomponents (such as restricted stock units and stock options). Base salary and incentive compensation constitutea Management Committee member’s “Total Reward.” The portion of a Management Committee member’sincentive compensation that is equity-based was determined pursuant to a progressive compensation-basedformula. Executives with higher incentive compensation received a higher percentage of that compensation inequity form.

• Base Salaries. Management Committee members’ base salaries are a relatively small portion of theiroverall compensation. We consider individual experience, responsibilities and tenure when determiningbase salaries. Management Committee members’ base salaries are generally in the range of median basesalaries paid by key competitors to employees having comparable duties and responsibilities.

• Incentive Compensation. Management Committee members’ total compensation is heavily weightedtoward performance-based, incentive compensation. Their annual incentive compensation variesaccording to Company, business unit and individual performance. We believe this links theircompensation with Company, business unit and individual performance, and is consistent with ourcompensation policies discussed above. Generally, a portion of the annual incentive compensation is paidin cash and a significant portion is paid in equity, the value of which depends upon the future marketvalue of the Company’s common stock. We believe that equity-based compensation provides acontinuing incentive for Management Committee members to foster the Company’s success long after weaward the compensation.

Compensation for fiscal 2001. We analyzed the following factors when awarding incentivecompensation for fiscal 2001:

• the Company’s ROE on an absolute and comparative basis;

• the Company’s achievements and financial performance for fiscal 2001, and individual and business unitperformance;

• the Company’s and its business units’ financial performance in fiscal 2001 compared to the estimatedfinancial performance of most of the Financial Services Companies (or subdivisions thereof);

• the estimated compensation levels of executives at certain of the Financial Services Companies (orsubdivisions thereof); and

• leadership displayed during the year.

These factors were not, however, the sole items we considered, and we did not attempt to set Total Rewards in arange established by a comparison of the financial performance of, or compensation levels of, the FinancialServices Companies or the other competitors operating in the same or similar businesses as the Company. For

11

purposes of this report, the term “Financial Services Companies” means the following companies (orsubdivisions thereof): A.G. Edwards, Inc.; American International Group, Inc.; American Express Company;Bank One Corporation; The Bear Stearns Companies Inc.; Capital One Financial Corporation; The CharlesSchwab Corporation; Citigroup Inc.; Credit Suisse Group; Deutsche Bank AG; Eaton Vance Corp.; FranklinResources, Inc.; The Goldman Sachs Group, Inc.; The John Nuveen Company; Legg Mason, Inc.; J.P. MorganChase & Co.; Lehman Brothers Holdings Inc.; MBNA Corporation; Merrill Lynch & Co., Inc.; PrudentialFinancial, Inc.; Providian Financial Corporation; Stilwell Financial Inc.; T. Rowe Price Group, Inc. and UBSAG.

We believe the Company performed well in very challenging market conditions. The global markets for mergersand acquisitions and equity new issuances were down significantly. Retail participation and flows into equitymutual funds decreased sharply. The Company’s Credit Services business was adversely affected by higher creditcard losses, higher unemployment and a rise in personal bankruptcy filings.

Overall, the Company maintained its competitive position in its key businesses, and its financial performancewas good. The Company’s ROE was approximately 19%, which was very competitive with our key competitors,and within our target of 18%-20%. The Company continued to generate substantial capital internally,repurchased approximately $1.6 billion of common stock and maintained a strong financial position, including an“Aa3” rating from Moody’s and an “AA-” rating from S&P.

We certified in accordance with Section 162(m) that the Company’s financial results for fiscal 2001 satisfied theperformance criteria set in accordance with Section 162(m) for fiscal 2001. After analyzing the considerations setforth above, we awarded Total Rewards to the Management Committee members for fiscal 2001 that were equalto or below the Total Rewards yielded by the application of the compensation formula contained in theperformance criteria. We awarded incentive compensation to the Management Committee members, partly incash and partly in the form of long-term equity awards (restricted stock units and options). We awarded anaverage of approximately 42% of each Management Committee member’s Total Reward in long-term equityawards. We ascribed value to restricted stock units based on a 25% discount from the fair market value of thecommon stock in order to compensate for the significant restrictions on disposition of these units. This valuediffers from the amounts reported in the summary compensation table under the column headed “RestrictedStock Awards.” We valued stock option awards based upon a ratio of three options per undiscounted share of theCompany’s common stock. The ratio is based upon the Company’s historical practices and is competitive withthe Company’s major competitors’ compensation practices.

CEO compensation for fiscal 2001. Mr. Purcell’s base salary is based on the criteria described in thisreport. We did not increase his salary for fiscal 2001.

We determined incentive compensation for Mr. Purcell in accordance with the policies described above relatingto all Management Committee members based on the same factors and Section 162(m) performance criteria asfor the other Management Committee members. Based on his individual and the Company’s performance,Mr. Purcell’s Total Reward was $15,000,000, consisting of the following components:

Base Salary Cash Bonus 77,304 Restricted Units 173,934 Stock Options Total

$775,000 $7,612,500 $3,306,250 $3,306,250 $15,000,000

Mr. Purcell’s Total Reward was down 40% compared to fiscal 2000. The equity-based awards contain the termsand conditions discussed in the following tables. 46% of Mr. Purcell’s incentive compensation was equity-based.That compensation is at risk because it is tied to the Company’s future performance. Mr. Purcell’s Total Rewardreflects the Company’s performance and his individual leadership throughout a very challenging year.

Conclusion. Attracting, retaining and motivating talented management and employees is essential to createlong-term shareholder value. Offering a competitive, performance-based compensation program with a largeequity component helps to achieve this objective by aligning the interests of Management Committee members

12

and other key employees with shareholders interests. We believe that the Company’s fiscal 2001 compensationprogram met these objectives.

Respectfully submitted,

Charles F. Knight, ChairRobert P. BaumanEdward A. BrennanC. Robert Kidder

Summary compensation table. The following table contains information with respect to the CEO and the fourother most highly compensated executive officers. We adjusted the number of shares and per share prices toreflect the Company’s two-for-one stock split effective January 26, 2000. The fiscal 2001 compensation paid tothe five most highly compensated officers decreased 32% from the fiscal 2000 compensation paid to that year’sfive most highly compensated officers employed at fiscal year end.

ANNUAL COMPENSATION

LONG-TERMCOMPENSATION

AWARDS

Name and Principal PositionFiscalYear Salary ($)(1) Bonus ($)(1)

Other AnnualCompensation ($)

RestrictedStock

Award(s) ($)(2)

SecuritiesUnderlyingOptions (#)

All OtherCompensation ($)(3)

Philip J. Purcell 2001 775,000 7,612,500 — 4,410,193 173,934(5) 19,690Chairman of the Boardand CEO

2000 775,000 12,612,500 113,178(4) 8,531,064 266,596(5)

313,772(6)27,000

580,3681999 775,000 12,112,500 — 8,184,303 277,172(5) 25,500

Robert G. Scott 2001 474,658 7,262,671 — 4,176,858 164,732(5) 19,690President and COO 2000 300,000 6,600,000 — 4,114,008 128,563(5) 27,000

1999 300,000 6,350,000 — 3,940,142 133,442(5) 25,500

Vikram S. Pandit 2001 425,000 7,037,500 — 4,026,703 158,809(5) 19,690Co-President and COO of 2000 300,000 10,350,000 — 6,868,944 214,654(5) 27,000Institutional Securities Group 1999 300,000 8,350,000 — 5,413,195 183,326(5) 25,500

Stephan F. Newhouse 2001 425,000 7,037,500 245,470(7) 4,026,703 158,809(5) 19,690Co-President and COO of 2000 300,000 6,350,000 — 3,930,336 122,823(5) 27,000Institutional Securities Group 1999 300,000 4,350,000 — 2,467,223 83,556(5) 25,500

John P. Havens* 2001 300,000 6,350,000 — 3,568,135 140,725(5) 19,690Head of Worldwide 2000 259,153 8,370,423 — 5,414,616 169,208(5) 27,000Institutional Equity Division

* Mr. Havens became an executive officer in 2000.(1) Includes amounts contributed to various deferred compensation plans of the Company.(2) The market value of the common stock underlying restricted stock units (RSUs) using the closing price pershare of common stock on the applicable grant date, as reported on the NYSE Composite Tape, and withoutrecognizing any diminution in value attributable to the restrictions on RSUs. Fiscal 2001 RSUs were granted onDecember 6, 2001; the closing price on that date was $57.05. Fiscal 2001 RSUs vest on January 2, 2004, subjectto earlier vesting upon termination of employment without cause or upon a change of control of the Company.Fiscal 2000 RSUs were granted on December 5, 2000; the closing price on that date was $72.00. Fiscal 2000RSUs vest on January 2, 2003, subject to earlier vesting upon termination of employment without cause or upona change of control of the Company. Fiscal 1999 RSUs were granted on December 9, 1999; the closing price onthat date was $66.4375. Seventy-five percent of fiscal 1999 RSUs vested on January 2, 2000 and the remaining25% vest on January 2, 2005, subject to earlier vesting upon termination of employment because of retirement,disability or death, or upon a change of control of the Company. Dividend equivalents are paid on all these RSUsat the same rate that dividends are paid on shares of common stock. These RSUs are neither transferable norgenerally distributed in the form of shares of common stock for five years after the grant date and are subject tocancellation in certain circumstances. The following lists the number of RSUs awarded in each applicable year

13

and the total number and value of RSUs held as of fiscal 2001 year end (including fiscal 2001 grant). The valueascribed to RSUs in this table differs from the value ascribed to them by the Compensation Committee. See theCompensation Committee report on executive compensation beginning on page 10.

Number of RSUs awarded for performance inTotal RSUs held as of 11/30/01(including fiscal 2001 grant)

Named Executive Officer Fiscal 2001 Fiscal 2000 Fiscal 1999 Number Held Market Value

Philip J. Purcell 77,304 118,487 123,188 617,601 $34,276,856Robert G. Scott 73,214 57,139 59,306 1,031,131 $57,227,771Vikram S. Pandit 70,582 95,402 81,478 1,239,048 $68,767,164Stephan F. Newhouse 70,582 54,588 37,136 617,218 $34,255,599John P. Havens 62,544 75,203 — 868,621 $48,208,466

(3) Amounts allocated under the DPSP and the ESOP. For fiscal 2001, the Company allocated 31.9% and 68.1%to the DPSP and ESOP, respectively. For fiscal 2000, the Company allocated 50.4% and 49.6% to the DPSP andESOP, respectively. For fiscal 1999, the Company allocated 50.2% and 49.8% to the DPSP and ESOP,respectively.(4) Includes $101,667 reflecting personal use of Company aircraft as required by Company policy.(5) Awards of stock options for services in the fiscal year shown. These options have restoration option rights(RORs) that are described in footnote 1 of the following table.(6) Restoration options granted upon exercise of RORs.(7) Includes payments and reimbursements under the Company’s temporary overseas assignment policy, which isapplicable to all employees serving on temporary overseas assignment and is designed to eliminate any financialdetriment or gain to the employee from the overseas assignment. Includes a housing allowance of approximately$127,719 and tax equalization and reimbursement payments of approximately $77,909.

Option grants in last fiscal year. The table below describes stock options granted to the Named ExecutiveOfficers during fiscal 2001 (including those awarded on December 6, 2001 for service in fiscal 2001).

Name

Number of SecuritiesUnderlying Options

Granted(#)(1)

% of TotalOptions

Granted to AllEmployees inFiscal Year

ExercisePrice PerShare($)

ExpirationDate

Grant DatePresentValue($)(2)

Philip J. Purcell 173,934 0.74 57.0258 1/2/2012 3,306,242Robert G. Scott 164,732 0.71 57.0258 1/2/2012 3,131,325Vikram S. Pandit 158,809 0.68 57.0258 1/2/2012 3,018,737Stephan F. Newhouse 158,809 0.68 57.0258 1/2/2012 3,018,737John P. Havens 140,725 0.60 57.0258 1/2/2012 2,674,985

(1) Awards under the 1995 Equity Incentive Compensation Plan for services performed in fiscal 2001. TheCompensation Committee approved the grant on December 6, 2001, with an exercise price equal to the volumeweighted average price of our common stock on that date. These options vest and become exercisable on January2, 2004, are not transferable and are subject to forfeiture under certain circumstances. Shares of common stockacquired upon the exercise of such options generally may not be transferred or sold until January 2, 2007. Upon achange of control of the Company or the recipient’s termination of employment without cause, these options willvest and become exercisable, and the shares of common stock acquired upon exercise of the options will nolonger be subject to transfer restrictions.

These options have RORs. RORs entitle the grantee, upon exercise of the underlying option while the grantee isan employee of the Company and upon tendering shares of common stock to the Company in satisfaction of theexercise price of such underlying option, to an additional option (Restoration Option) to acquire the number ofshares of common stock equal to the number of shares of common stock surrendered to pay the exercise price ortaxes upon the exercise of the underlying option, at a per share price equal to the volume weighted average price

14

of our common stock on the exercise date of such underlying option. Each Restoration Option is vested upongrant and has the same expiration date and transfer restrictions as its underlying option. RORs do not increase theoption holder’s net equity position. Instead, RORs preserve the holder’s commitment to the Company bymaintaining the holder’s net equity position—the sum of shares owned and shares subject to option.(2) Options were valued by the Compensation Committee by dividing the option exercise price by three. Thisvalue, multiplied by the number of options set forth under the caption “Number of Securities Underlying OptionsGranted,” equals the grant date present value. The 3-to-1 ratio is based on the Company’s historical practices andis comparable with the practices of its major competitors. If an option were valued using an option pricing modelsuch as Black-Scholes, the option’s value would depend upon the assumptions used. For example, employing amodified Black-Scholes model, the values could range from $16.55 per option (assuming the option wasexercised at the end of five years) to $21.95 per option (assuming the option was exercised at the end of theoption term). Each of the foregoing values assumes: (i) a stock price volatility of 43.64%; (ii) a risk-free rate ofreturn that was the implied rate on the grant date of a zero coupon U.S. Treasury STRIPS having a remainingterm approximately equal to the assumed term of the subject option; and (iii) the Company’s estimatedannualized dividend yield on the grant date was constant over the life of the option. In addition, for each of thesevaluations, a discount of 25% was applied to reflect the transfer restrictions on the underlying common stock.The values are hypothetical and there is no assurance that such values will be realized. The actual gain, if any,realized on the stock options will depend on the future price of the common stock.

Aggregated option exercises in last fiscal year and fiscal year-end option values. The following tablecontains the aggregate number of shares of common stock underlying stock options exercised in fiscal 2001 andthe number of shares underlying stock options held by each Named Executive Officer as of November 30, 2001(including those awarded on December 6, 2001 for service in fiscal 2001).

SharesAcquired onExercise(#)(1)

ValueRealized($)(2)

Number of SecuritiesUnderlying Unexercised

Options atFiscal Year-End(#)(3)

Value of Unexercised In-the-Money Options atFiscal Year-End($)(4)

Name Exercisable(5) Unexercisable Exercisable(5) Unexercisable

Philip J. Purcell 159,928 7,641,568 2,910,684 522,436 70,386,396 379,757Robert G. Scott — — 1,217,812 356,349 41,404,782 1,313,661Vikram S. Pandit 132,000 7,706,490 1,205,220 457,777 40,464,507 1,737,824Stephan F. Newhouse — — 315,950 318,820 8,514,108 729,173John P. Havens — — 729,262 399,941 28,478,961 3,173,374

(1) The number of shares underlying options exercised in fiscal 2001 by the Named Executive Officers. Theactual number of shares Messrs. Purcell and Pandit received from options each exercised in fiscal 2001 (net ofshares tendered to cover the exercise price and withheld to pay income tax) was 64,588 and 86,781, respectively.(2) The difference between the market price of the common stock on the exercise date and the option exerciseprice multiplied by the number of shares acquired upon exercise.(3) The Company has no stock appreciation rights outstanding. The shares of common stock that would beacquired upon exercising certain of these options are restricted from transfer.(4) The value of unexercised, in-the-money options is the aggregate, calculated on a grant-by-grant basis, of theproduct of the number of unexercised options multiplied by the difference between $57.0258, the volumeweighted average price of our common stock on December 6, 2001, and the exercise prices of all such options.The actual gain, if any, realized on the options will depend on the difference between the market price of thecommon stock on the exercise date and the option exercise price.(5) Includes options that vested and became exercisable on January 2, 2002.

15

Pension plans. The paragraphs below discuss the amounts the Company estimates it will pay to each of theNamed Executive Officers in annual benefits upon retirement.

Mr. Purcell participates in several defined benefit pension plans, including some unfunded executive plans,which collectively provide a benefit of approximately $1,451,000 per year for life upon retirement at age 65 with30 years of service, proportionately adjusted for less (or more) service on account of earlier (or later) retirement.As of November 30, 2001, Mr. Purcell was credited with 23 years of benefit service (rounded to the nearestwhole year). The overall benefit is developed from a formula which generally disregards pay increases, butrecognizes service after 1994, and the amount estimated above is before applicable deductions relating to benefitsfrom retirement plans of Sears, Roebuck and Co. and before any potential reduction on account of changes inSocial Security.

Messrs. Scott, Pandit, Newhouse and Havens participate in defined benefit pension plans intended to qualifyunder Section 401(a) of the Internal Revenue Code, and other plans that are nonqualified, unfunded plans forcertain key executives. The compensation of each executive for purposes of determining benefits under the plansduring fiscal 2001 is the amount reported as base salary in the summary compensation table. As of November 30,2001, the credited years of service (rounded to the nearest whole year) under the plans for Messrs. Scott, Pandit,Newhouse and Havens were 31, 19, 23, and 15 years, respectively. The estimates in the table below assume thatthe executive is eligible to participate in all of the Company’s retirement plans and remains in service with theCompany until retirement at age 65. The amounts shown in the table are not subject to any deduction for socialsecurity or other offset amounts.

Estimated Annual Retirement Benefits(payable as a single-life annuity)

Final AverageCompensation Credited Years of Service

5 10 15 20 25 30 35

$ 200,000 $ 40,000 $ 60,000 $ 80,000 $100,000 $100,000 $110,000 $120,000300,000 60,000 90,000 120,000 140,000 140,000 140,000 152,942400,000 80,000 120,000 140,000 140,000 146,744 176,093 205,442500,000 100,000 140,000 140,000 147,395 184,244 221,093 257,942600,000 120,000 140,000 140,000 177,395 221,744 266,093 310,442700,000 140,000 140,000 155,546 207,395 259,244 311,093 362,942800,000 140,000 140,000 178,046 237,395 296,744 356,093 415,442900,000 140,000 140,000 200,546 267,395 334,244 401,093 467,942

1,000,000 140,000 148,698 223,046 297,395 371,744 446,093 520,442

16

Stock performance graph. The following graph compares the cumulative total shareholder return (rounded tothe nearest whole dollar) of our common stock, the S&P 500 Stock Index and the S&P Financial-Misc. Index forour last five fiscal years. The graph assumes a $100 investment at the closing price on November 29, 1996 andreinvestment of dividends on the date of payment without commissions. This table does not forecast futureperformance of our common stock.

Item 3—Ratification of appointment of the Company’s independent auditors

The Board of Directors has, based on the recommendation of the Audit Committee, appointed Deloitte & ToucheLLP as independent auditors for the 2002 fiscal year, subject to shareholder ratification. Deloitte & Touche willaudit our consolidated financial statements for fiscal 2002 and perform other services.

Audit fees. The aggregate fees for professional services rendered by Deloitte & Touche in connection withtheir audit of our consolidated financial statements and reviews of the condensed consolidated financialstatements included in our Quarterly Reports on Form 10-Q for fiscal 2001 were approximately $14.7 million.

Financial information systems design and implementation fees. The aggregate fees for professional servicesrendered by Deloitte & Touche in fiscal 2001 relating to financial information systems design andimplementation were approximately $0.3 million.

All other fees. The aggregate fees for all other services rendered by Deloitte & Touche in fiscal 2001 wereapproximately $30.5 million and can be sub-categorized as follows:

Attestation fees. Fees for attestation services for matters such as comfort letters and consents relatedto SEC and other registration statements, audits of employee benefit plans, agreed-upon procedures, andconsultation on accounting standards or transactions were approximately $3 million.

Other fees. Fees for all other services, such as consultation related to tax planning and compliance,improving business and operational processes and regulatory matters were approximately $27.5 million.

Fund-related fees. The Company offers investment products, including money market, equity and fixedincome funds and commodity pools (Funds). Deloitte & Touche provides audit and other services to certain ofthese Funds. The fees received by Deloitte & Touche for such services in fiscal 2001 were approximately $6.1

17

million (audit) and $1.7 million (non-audit). Most of the Funds have audit committees, comprised solely ofdirectors who are independent of the Company and are not on the Company’s Board of Directors, which areresponsible for, among other things, the selection of the Funds’ audit firms. Of the Fund-related fees describedabove, those paid by Funds that have independent audit committees were $5.4 million (audit) and $1.1 million(non-audit).

A Deloitte & Touche representative will be present at the annual meeting and will have an opportunity to make astatement and to answer your questions. If the shareholders do not ratify the appointment, the Board willreconsider it.

The Board recommends a vote FOR the ratification of Deloitte & Touche’s appointment as the Company’sindependent auditors.

Audit Committee report. The Audit Committee of the Board of Directors is responsible for monitoring theintegrity of the Company’s consolidated financial statements, the Company’s system of internal controls and theindependence and performance of its internal and independent auditors. We also recommend to the Board,subject to shareholder ratification, the selection of the Company’s independent auditors. The Committee iscomposed of six non-employee directors and operates under a written charter adopted and approved by theBoard. The Board has determined that each Committee member is independent as defined by NYSE listingstandards.

Management is responsible for the financial reporting process, including the system of internal controls, and forthe preparation of consolidated financial statements in accordance with generally accepted accounting principles.The Company’s independent auditors are responsible for auditing those financial statements and expressing anopinion as to their conformity with generally accepted accounting principles. Our responsibility is to monitor andreview these processes. However, we are not professionally engaged in the practice of accounting or auditing andare not experts in the fields of accounting or auditing, including with respect to auditor independence. We rely,without independent verification, on the information provided to us and on the representations made bymanagement and the independent auditors.

In this context, we held four meetings during fiscal 2001. The meetings were designed, among other things, tofacilitate and encourage communication among the Committee, management, the internal auditors and theCompany’s independent auditors, Deloitte & Touche LLP. We discussed with the Company’s internal auditorsand Deloitte & Touche the overall scope and plans for their respective audits. We met with the internal auditorsand Deloitte & Touche, with and without management present, to discuss the results of their examinations andtheir evaluations of the Company’s internal controls.

We have reviewed and discussed the audited consolidated financial statements for the fiscal year endedNovember 30, 2001 with management, the internal auditors and Deloitte & Touche.

We also discussed with Deloitte & Touche matters required to be discussed with audit committees undergenerally accepted auditing standards, including, among other things, matters related to the conduct of the auditof the Company’s consolidated financial statements and the matters required to be discussed by Statement onAuditing Standards No. 61, as amended (Communication with Audit Committees).

Deloitte & Touche also provided to us the written disclosures and the letter required by Independence StandardsBoard Standard No. 1 (Independence Discussions with Audit Committees), and we discussed with them theirindependence from the Company. When considering Deloitte & Touche’s independence, we considered whethertheir provision of services to the Company beyond those rendered in connection with their audit and review ofthe Company’s consolidated financial statements was compatible with maintaining their independence. We alsoreviewed, among other things, the amount of fees paid to Deloitte & Touche for audit and non-audit services.

18

Based on our review and these meetings, discussions and reports, and subject to the limitations on our role andresponsibilities referred to above and in the Audit Committee Charter, we recommended to the Board that theCompany’s audited consolidated financial statements for the fiscal year ended November 30, 2001 be included inthe Company’s Annual Report on Form 10-K. We have also recommended the selection of the Company’sindependent auditors, and, based on our recommendation, the Board has selected Deloitte & Touche as theCompany’s independent auditors for the fiscal year ended November 30, 2002, subject to shareholder ratification.

Edward A. Brennan, ChairJohn E. JacobC. Robert KidderJohn W. MadiganMiles L. MarshLaura D’Andrea Tyson

Item 4—Shareholder proposal regarding staggered boards

The Company has set forth below a shareholder proposal and its supporting statement for which the Board ofDirectors and the Company accept no responsibility. The Board’s recommendation immediately follows. Theproposal may be voted on at the annual meeting only if properly presented by the shareholder proponent or theproponent’s qualified representative.

Evelyn Y. Davis, Watergate Office Building, 2600 Virginia Ave. NW, Suite 215, Washington D.C. 20037, ownerof 100 shares of common stock, has notified the Company that she intends to present the following proposal andrelated supporting statement at the annual meeting:

Resolved: That the stockholders of Morgan Stanley Dean Witter recommend that the Board of Directorstake the necessary steps to instate the election of directors ANNUALLY, instead of the stagger system.

Reasons: The great majority of New York Stock Exchange listed corporations elect all their directorseach year. This insures that ALL directors will be more accountable to ALL shareholders each year and to acertain extent prevents the self-perpetuation of the Board. In the year 2000 48.6% of shares voting voted for mysimilar resolution. The amount of shares voting FOR was 437,543,608 shares. If you AGREE, please mark yourproxy FOR this resolution.

THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE AGAINST THIS PROPOSAL. Thisproposal has been submitted by this proponent at previous meetings, and defeated by our shareholders each time.Our Board continues to believe that staggered elections are in the best interest of our Company and ourshareholders, and opposes this proposal for the following reasons.

• Continuity and Stability. Staggered elections can facilitate continuity. They can contribute to the stabilityof leadership and strategy. They provide that a majority of our directors always will have prior experience onour Board and be familiar with our complex, global business. They also enable new directors to learn fromcontinuing directors. The continuity and stability that result from staggered elections foster effective long-termplanning and help create long-term value for our shareholders. If all directors were elected annually, a majoritycould be replaced each year, resulting in directors being unfamiliar with our Company. This could jeopardize,based on misplaced short-term objectives, our strategies and the long-term interests of our Company and ourshareholders.

• Value Protection. The stagger system does not prevent a takeover. If, however, our Company faces acoercive takeover attempt, the system can benefit shareholders. It helps ensure that the Board will have

19

sufficient time to evaluate proposals, consider alternatives and act in the best interest of our Company and ourshareholders. It also encourages potential acquirers to negotiate. Outsiders cannot abruptly change our Boardcomposition without our Board’s support.

• Independence. Electing directors to three-year, not one-year, terms can enhance the independence of non-management directors. The longer term reduces management’s ability to pressure directors.

• Accountability. Three-year terms do not reduce the accountability of directors to shareholders. Directorshave the same fiduciary duties to shareholders regardless of the length of their term.

• Recognition. A number of leading independent institutional investors and commentators and well-respectedmajor corporations have recognized the stagger system’s benefits and concluded that the system can providelegitimate benefits to the board.

• Shareholders’ Interest. All of our directors are also shareholders. They share our shareholders’ interests. Inaddition, our director compensation program further aligns each director’s interests with shareholder interests.A substantial portion of each director’s compensation is paid in our common stock and stock options, and thisprovides a continuing incentive to increase shareholder value and to promote the Company’s long-termsuccess.

• Relationships. The continuity and stability fostered by the stagger system can be especially important tofinancial services firms. A threat of a sudden change in control, absent such system, could prompt employees,our key asset, to leave and could damage client relationships.

• Prior Shareholder Approval. Prior to their 1997 merger, neither Morgan Stanley Group nor Dean WitterDiscover had a stagger system. Each company’s board of directors determined that a stagger system would bein the best interest of the merged company. Accordingly, as submitted to shareholders for approval, the mergerproposal provided that the merged company would have a stagger system. The merger proposed was approvedby each company’s shareholders, with the result that our Company has had a stagger system since May 31,1997.

The Board of Directors recommends you vote AGAINST this proposal. The proxy holders will vote allproxies received AGAINST this proposal unless otherwise instructed.

Other matters

Shareholder Rights Plan (pill): Director Evaluation. Morgan Stanley management will recommend to theCompany’s Board of Directors that the Board adopt a TIDE proposal (Three-Year Independent DirectorEvaluation of the Company’s current Shareholder Rights Plan (pill)). The Board will vote on this proposal at itsMarch 18, 2002 meeting, and management anticipates that the Board will pass this proposal.

The TIDE proposal will provide for independent Company directors to evaluate the Shareholder Rights Plan(pill) every three years. The independent directors will evaluate the factors that companies consider important tothis issue and that institutional investors consider important to this issue. The first Board review will be reportedin the Company’s 2003 proxy statement. Management is recommending this TIDE proposal in response to ashareholder proposal by Emil Rossi asking for a shareholder vote on whether or not to maintain or adopt aShareholder Rights Plan (pill).

Certain transactions. During fiscal 2001, our subsidiaries extended credit in the ordinary course of business tocertain of our directors, officers and employees, and members of their immediate families. These extensions ofcredit were in connection with margin loans, mortgage loans, credit cards, revolving lines of credit and otherextensions of credit by our subsidiaries. The extensions of credit were made on substantially the same terms,

20

including interest rates and collateral requirements, as those prevailing at the time for comparable transactionswith other persons. The extensions did not involve more than the normal risk of collectibility or present otherunfavorable features. Officers and employees of our securities and investment management businesses (andmembers of their immediate families living in the same household) who wish to purchase securities in brokeragetransactions are generally required by firm policy to do so through MS&Co. or MSDWI. These subsidiaries mayoffer them discounts on their standard commission rates. MS&Co. and MSDWI also, from time to time and inthe ordinary course of their business, enter into transactions on a principal basis involving the purchase or sale ofsecurities and derivative products in which our directors, officers and employees and members of their immediatefamilies have an interest. These purchases and sales may be made at a discount from the dealer mark-up or mark-down, as the case may be, charged to non-affiliated third parties. In addition, we may, pursuant to stockrepurchase authorizations in effect from time to time, repurchase or acquire shares of common stock in the openmarket or in privately negotiated transactions, which may include transactions with directors, executive officersand employees. These transactions are in the ordinary course of business and at prevailing market prices.

We may also, from time to time, make advances and loans to certain of our directors, officers and employees inconnection with housing, relocation and other expenses. Such advances are against commissions and othercompensation that would otherwise be payable to these individuals in the ordinary course of business. In someinstances, we do not charge interest on such advances and loans. On June 14, 2001, we issued a guarantee in theamount of $2,500,000 to an unaffiliated lender to secure a personal loan from such lender to Tarek Abdel-Meguid, one of our executive officers. The guarantee has not been drawn upon.

During fiscal 2001, we engaged in transactions in the ordinary course of business with State Street Bank andTrust Company and certain of its affiliates. State Street beneficially owns more than 5% of the outstanding sharesof common stock. Such transactions were on substantially the same terms as those prevailing at the time forcomparable transactions with unrelated third parties. We also perform, in the ordinary course of business,investment banking, financial advisory, retail brokerage and other services for our directors or entities withwhich they are affiliated.

Other business. All of the matters we knew about as of February 15, 2002 to be brought before the annualmeeting are described in this proxy statement. If any other matter is properly brought before the meeting, theproxy holders will vote on such matter according to their judgment.

Shareholder proposals for the 2003 annual meeting. Under SEC rules, shareholders intending to present aproposal at the 2003 annual meeting and have it included in our proxy statement for that meeting must submit theproposal in writing to Donald G. Kempf, Jr., Secretary, 1585 Broadway, New York, New York 10036. We mustreceive the proposal no later than October 18, 2002.

Shareholders intending to present a proposal at the 2003 annual meeting, but not to include the proposal in ourproxy statement, or to nominate a person for election as a director, must comply with the requirements set forthin the Company’s Bylaws. Our Bylaws require, among other things, that our Secretary receive written noticefrom the record shareholder of intent to present such proposal or nomination no more than 120 days and no lessthan 90 days prior to the anniversary of the preceding year’s annual meeting. Therefore, the Company mustreceive notice of such a proposal or nomination for the 2003 annual meeting no earlier than November 19, 2002and no later than December 19, 2002. The notice must contain the information required by the Bylaws, a copy ofwhich is available upon request to our Secretary.

Cost of soliciting your proxy. We will pay the expenses of the preparation of the proxy materials and thesolicitation by the Board of Directors of your proxy. Our directors, officers and employees, who will receive noadditional compensation for soliciting, and Morrow & Co., may solicit your proxy by telephone or other means.We will pay Morrow a fee of $25,000 plus an amount that will depend upon the results of the solicitation plusexpenses. We will also reimburse brokers, including MS&Co., MSDWI and other nominees, for costs they incurmailing proxy materials.

21

Shareholders sharing an address. In accordance with a notice sent earlier this year to shareholders who sharea single address, we are sending only one summary annual report, Form 10-K and proxy statement to that addressunless we received contrary instructions from any shareholder at that address. This practice, known as“householding,” is designed to reduce our printing and postage costs. Shareholders may request or discontinuehouseholding, or may request a separate copy of the summary annual report, Form 10-K or proxy statement asfollows:

• Record shareholders who wish to discontinue or commence householding, or any record shareholder residingat a householded address who would like to request prompt delivery of a copy of the summary annual report,Form 10-K or proxy statement, should contact our transfer agent, Mellon Investor Services at 1-800-622-2393(U.S.), (201) 329-8660 (outside the U.S.) or www.melloninvestor.com, or may write to them at P.O. Box 3315,South Hackensack, NJ 07606-1915.

• Shareholders owning their shares through a bank, broker or other holder of record who wish to eitherdiscontinue or begin householding should contact their record holder. Any such householded shareholder mayrequest prompt delivery of a copy of the summary annual report, Form 10-K or proxy statement by contactingus at (212) 762-8131 or may write to us at Investor Relations, 1585 Broadway, New York, NY 10036.

Electronic access to annual meeting materials. This proxy statement, the summary annual report and Form10-K are available on our website at www.morganstanley.com. You can save the Company postage and printingexpense by consenting to access these documents over the internet. If you consent, you will receive notice nextyear when these documents are available with instructions on how to view them and submit voting instructions.If you are a shareholder of record, you may sign up for this service through Investor ServiceDirect atwww.melloninvestor.com. If you hold your shares through a bank, broker or other holder of record, contact suchrecord holder for information regarding electronic delivery of materials. Your consent to electronic delivery willremain in effect until you revoke it. Please be aware that if you choose electronic delivery, you may incur costs,such as telephone and internet access charges, for which you will be responsible.

22